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Exam 18: Managerial Accounting Concepts and Principles

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Question 1

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Classifying costs by behavior involves:

A) Identifying fixed cost and variable cost.
B) Identifying cost of goods sold and operating costs.
C) Identifying all costs.
D) Identifying costs in a physical manner.
E) Identifying both quantitative and qualitative cost factors.

F) A) and B)
G) None of the above

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Question 2

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For product costs associated with a particular product to be expensed on the income statement:

A) The product must be transferred to Finished Goods Inventory.
B) The product must still be in Goods In Process Inventory.
C) The product must be sold.
D) The product may be in any of the manufacturer's inventory accounts.
E) The company must expect to sell the product during the next twelve months.

F) C) and D)
G) A) and D)

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Question 3

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A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products.

Costs that flow directly to the current income statement are called:

Continuous improvement:

Both financial and managerial accounting report monetary information; managerial accounting also reports considerable nonmonetary information.

Using the information below for Talking Toys, Inc., determine the manufacturing costs incurred during the year:

A manufacturing firm's cost of goods manufactured is equivalent to a merchandising firm's:

For each item shown below, classify it as a product cost or a period cost, by placing an X in the appropriate column. For each item that is a product cost, also indicate whether it is a direct cost or an indirect cost with respect to a unit of finished product.

An employee devises a payroll scheme that costs the employer $150. The employer discovers the fraud but decides not to confront the employee since the amount of the fraud is small. Discuss why this course of action is not advisable.

Adopting a lean business model should have no effect on cost in a modern manufacturing environment.

Managerial accounting information can be forwarded to the managers of a company quickly since external auditors do not have to review it, and estimates and projections are acceptable.

A management concept that applies quality improvement to all aspects of business activities is called:

The focus of managerial accounting is on providing ________________ reports while the focus of financial accounting is on providing _____________ reports.

Which one of the following items is normally not a manufacturing cost?

Product costs can be classified as one of three types: direct materials, direct labor, or overhead.

Identify the three categories of manufacturing costs.

Ajax Company accumulated the following account information for the year: Using the above information, total factory overhead costs would be:

Horton Foods bakes and sells 1,000 dozen bagels each week to food service operations. Among the costs are bakers' salaries, $24,000; production management salaries, $16,000; production equipment operating costs, $32,000; and flour and ingredient costs, $15,000. Using this information, compute: (a) prime costs and (b) conversion costs Feedback:

One of the main differences between the calculation of cost of goods sold for a merchandiser and that of a manufacturer is that the calculation includes cost of goods purchased for the merchandiser, but the manufacturer replaces that with __________________________.